JCPenney: The Quiet Green Giant

JCPenney: The Quiet Green Giant

To the average shopper, JCPenney is the place to go for great styles at compelling prices. But to industry insiders, JCPenney is an eco-leader, ranking #63 out of 500 companies on Newsweek's second annual list of "The Greenest Big Companies in America." In this interview, JCP's VP of CSR, Jim Thomas, takes the mystery out of this Fortune 500's sustainability strategy.

"Does it square with what is right and just?" So goes the last line of The Penney Idea, arguably one of the first values-based business code of ethics in the US. As Jim Thomas, V.P. of CSR for JCPenney toured me through the company museum in JCPenney's corporate headquarters, I learned everything I never knew about James Cash Penney, the founder of the national retail giant.

Born the seventh of 12 children to a poor farmer and Baptist minister, Penney was brought up to believe in self-reliance, honor, education, and The Golden Rule. In 1902, Penney imbued his first store with these qualities. By 1912, there were thirty-four "Golden Rule" stores with sales surpassing $2 million. In 1913, the chain became the J. C. Penney Company, and by 1914, Penney relocated his headquarters to New York City to be closer to major sources of merchandise.

Today, the JCPenney home office occupies a 1.9 million square-foot campus in Plano, Texas. The national chain has over 1,100 retail stores around America and operates 18 supply chain centers. To the untrained eye, it might seem this sprawling corporation is soft on sustainability. But after spending three months consulting on-site, I can attest that JCPenney takes its sustainability responsibilities very seriously. VP of CSR Jim Thomas came to the post with over a decade of experience in corporate citizenship with Swiss company Novartis. As vice chair of the Retail Industry Leaders Association's Retail Sustainability Initiative, he's spreading his expertise industry-wide. In this interview, Jim explains why JCPenney appears to lie low on sustainability even though Newsweek ranks it as one of America's greenest retailers.

Anna Clark: Jim, three shelves of your office library contain books on sustainability. You've got personal signed copies from leaders like Adam Werbach. Clearly this is not just a job for you. What fuels your passion for this work?

Jim Thomas: We're living off our natural capital. We have an urgent imperative to manage our natural capital more responsibly. The current global rate of consumption totals 1.5 planets worth of natural resources. That's the good news. If everyone lived like we do in America, we would need 5 or 6 planets.

AC: Congratulations on being ranked #63 out of 500 large companies in America on Newsweek's list of the greenest big companies. Can you tell me on what basis they evaluated your program?

JT: Newsweek took the biggest companies by revenue, market capitalization, and number of employees and evaluated them according to 700 metrics. Each company's overall green score has a weighted average of 45 percent environmental impact and 45 percent green policies. The other 10 percent is based on reputation. JCPenney scored the highest of anyone in retail on the Environmental Impact category -- 97.72 out of 100. Of course, this survey isn't the only thing that credentials our program. JCPenney was also listed #14 among the annual "Top 50" Most Socially Responsible Companies in the U.S. as ranked by the Boston College Center for Corporate Citizenship and The Reputation Institute. More details about our program can be found in our 2009 CSR report, which is available for public viewing and download.

AC: In a nutshell, what does JCPenney's energy conservation strategy entail?

JT: Earlier this year, we announced a goal to reduce facility energy consumption by 20 percent per gross square foot by 2015 by continuing to invest in more energy efficiency improvements and implementing daily energy-saving practices. JCPenney has taken an inclusive, "hands-on" approach to addressing environmental concerns by encouraging a company culture that advocates and practices conservation.

AC: Shoppers who expect to see a visible green presence in your retail stores might be in for a letdown. Can you explain the hidden qualities that make your stores sustainable?

JT: Sustainability is all about less energy, less waste, and saving money, so energy efficiency is a huge emphasis for us. We were the first department store retailer to be recognized for energy management by Energy Star. We were named the Energy Star Partner of the Year in 2007 and 2008, and achieved Sustained Excellence in 2009 and 2010. Because of our strides in energy efficiency, we are better able to manage our overhead costs and reduce our environmental impact.

AC: What kind of savings has JCPenney achieved through green practices?

JT: We save a great deal of money through energy efficiency, and recycling is also yielding returns. In 2009, JCPenney saved several million dollars through recycling. Our stores recycle about 70 percent of their waste and some of our supply chain centers recycle over 80 percent of their waste. In 2009, JCPenney recycled 89,000 tons of cardboard. Our stores recycled enough hangers to go around the earth almost 2 times!

AC: About 45 percent of your merchandise is private-label brands you design yourselves. Only a small amount of these products are green. Why aren't more of your products green?

JT: We believe that our customers appreciate environmental responsibility but aren't necessarily ready to pay more for it. They expect quality at an affordable price, so we offer a variety of merchandise that helps shoppers lessen their impact on the environment. JCPenney has an array of energy saving products in bedding and window treatments that help to reduce heating and cooling costs by up to 40 percent. We will continue to explore sustainable product options.

AC: Are you hopeful about the direction that corporate social responsibility is going?

JT: Yes, especially in the retail sector. Now when you look at companies that are leaders in CSR, retailers are towards the top of the list. At the end of the day, a retailer's reputation is much more exposed than many other types of businesses. An industrial company may sell their goods to 100 or so other businesses, but we sell to millions of people. Half of America's families shop at JCPenney each year.

AC: Do you partner with NGOs or other groups to fulfill sustainability goals?

JT: We had an MBA student intern through the Environmental Defense Fund's Climate Corps. This program identifies projects with the ability to develop tools that can be shared industry-wide and then provides free human resources to companies like ours. They see their payment in terms of improved environmental impact.

AC: Is there any single rule that a company should follow for going green?

JT: There's no one approach to sustainability, but I will say that the most successful green programs are the ones that save customers money. That's where the big opportunities lie.

AC: JCPenney appears to have high expectations for its associates. What sort of role do they expect to play in terms of sustainability?

JT: Associates are crucial to achieving our company-wide goal of reducing facility energy consumption by 20 percent by 2015. Associates are environmental stewards who are actively involved in reducing our carbon dioxide emissions by curtailing unnecessary electricity usage. We've consistently had a high degree of engagement around the environment. This is a critical part of our success in sustainability. As the head of CSR, I'm not working alone here. With over 150,000 associates company-wide, we all play a role in this.

"We feel good about where we are," Jim told me as we concluded our interview. "We're in a stronger financial position than we were at the start of the recession. Starting in 2013, we're planning to open 50 more stores by 2015. And be on the lookout for more green products in our stores," assures Jim. "We're doing more innovation. We're starting to offer some small LED lamps and rugs that are made out of recycled PET. We're creating these rugs with new spill-protection technology from 3M to increase durability and longevity."

Longevity is a long suit at JCPenney, which is 108 years and still going strong. On leaving the building for the last time, I stopped back by the museum for another glimpse into the life of James Cash Penney. Among his many philanthropic activities, in 1954 Penney set up the J.C. Penney Foundation, which supports organizations that address community involvement, the environment, and youth development through afterschool programs. For a man who started with a single store, he left quite a legacy. And for a company with such a luminous history, it appears to have an equally bright future.